Subscribe | Advertise | Contact Us | About Us |    
Consumer Packaged Goods

Bookmark and Share

The 'Omni-Channel' - and Its Implications for the Supply Chain

"Omni-channel" distribution is replacing the all-channel mode. Dave Kilzer, senior vice president of supply chain solutions with Idhasoft, explains the difference between the two concepts.

In retailing, "all-channel" is increasingly becoming replaced by "omni-channel." The latter describes a distributor's ability to provide an equally high level of service, regardless of the means by which product is purchased or shipped. All-channel can result in excess inventory, physically separated and unable to cross boundaries to meet the needs of the moment. Omni-channel, by contrast, makes its possible to hold inventory in multiple locations while treating it in one coherent "bucket," Kilzer says.

The two concepts involve different rules of allocation, and the supporting technology has to recognize that. It's getting to the point, says Kilzer, "where much of fulfillment in e-commerce is now being fueled, not from a DC, but from the backroom of a retail location." In essence, the distributor is reaching all the way to the store shelf.

The setup requires pinpoint visibility throughout the distribution chain, including the ability to manage the "black hole" that is created when a consumer takes product off the shelf and moves to the checkout stand. "Those two seconds are how tightly inventory has to be tracked," says Kilzer.

It's the consumer who has made the change possible, he says. Buyers' growing reliance on mobile devices such as the iPad and iPhone creates an environment where orders can come from multiple sources. In addition, the technology promotes social media as a major influence on customer buying behavior.

"What used to be an impulse buy is now often a well-educated buy," Kilzer says. The consumer is fully aware of price variances among retailers, as well as product details. Companies that fail to keep pace with the change risk losing sales to "show-rooming" - the practice whereby a consumer views a product in a physical store, then buys it online. Sellers employing an omni-channel approach can "seize" that sale however it occurs, reaching out to available inventory in order to fill the order.

To view the video in its entirety, click here

Keywords: supply chain, supply chain management, retail supply chain, inventory management, inventory control warehouse management, logistics management, supply chain planning, supply chain risk management

> more Consumer Packaged Goods articles
SCB TRANSLATOR (Over 60 languages)
Sponsored by: